Customs, Excise and Gold Tribunal - Mumbai
Elecon Engg. Co. Ltd., T.G. Patel, ... vs Cce on 30 October, 2003
Equivalent citations: 2004(163)ELT319(TRI-MUMBAI)
ORDER
K.K. Usha
1. These appeals are at the instance of assessee against the order passed by the Commissioner(Adjudication) dated 27.7.98. Challenge is directed against imposition of penalty of an amount of Rs. 41,21,321/-. Duty confirmed under the impugned order had already been paid by the assessee prior to the issue of show cause notice.
2. The appellant is engaged in the manufacture of materials handling equipments and discharging the duty liability on them. They were discharging the duty liability on its clearance at the factory gate. In cases when orders are received by the appellant for turnkey project and where there are escalation clauses in the contract, the appellant used to pay duty on the escalation charges after final settlement of the amount between the appellant and its customers and upon receipt of payment thereof. This was the procedure followed by the assessee for long years. While so, show cause notice dated 1.5.98 was issued calling upon the assessee as to why excise duty to the extent of Rs. 41,21,321/- should not be recovered under Section 11A(1) of the Central Excise Act and there was proposal for imposition of penalty under Section 11-AC and demand of interest under Section 11-AB. There was also a proposal for confiscation under Rule 173-Q(2) of the Central Excise Rules. The appellant replied contending that at the time of clearance of the goods at the factory gate it was not possible to pay duty on the escalation charges as it will not be determined at that time. It also pointed out that the procedure followed by it had already been accepted by the department for all these years. The Commissioner (Adjudication) confirmed the demand and imposed the penalty and ordered recovery of interest.
3. It is contended on behalf of the appellants before us that there was no suppression of facts on the part of the appellant which would justify the imposition of penalty under Section 11-AC and demand of interest under Section 11-AB. On behalf of the Revenue, it is submitted that the appellant suppressed the fact of receiving the escalated value and therefore, Section 11-AC and Section 11-AB are liable to be invoked. It is pointed out that there had been delay in making duty payment even after receipt of the amount pursuant to the escalation clause.
4. We do not find any merit in the contention raised on behalf of the Revenue. Duty was payable at the time of clearance of the goods. The appellant had not suppressed the contract from the authorities. The contract contained provision for escalation. If that be so, there is no question of suppression of relevant facts. In such circumstances, it would have been possible for the Revenue to go for provisional assessment so that at a later stage when the amount as per the escalation clause is received the demand for duty on it will not be hit by limitation. Since we come to the conclusion that there had not been suppression of relevant facts on the part of the appellant, we hold that imposition of penalty by invoking Section 11-AC and demand of interest under Section 11-AB are unsustainable. In the light of the above, penalty imposed on the appellants in E/3681, 3679, 3680 & 3682/98-Bom. under Rule 209A of the Central Excise Rules, 1944 cannot be sustained. In the result, the order impugned is set aside to that extent and the appeals are allowed, as above.
Operative part of the order already pronounced in the open Court. .